10 Forex trading tips

As a beginning forex trader, you can easily get lost, confused or overwhelmed with all the information you are bombarded with on the internet about trading. The best thing to do is to just take it slow, learn how to trade properly from an experienced professional and don’t rush it.

The following 10 forex trading tips are things that I wish someone had told me when I first began trading. So, with that in mind, I am giving you ten of the most important trading tips for a beginning (or any) trader to absorb before getting started in the market.

1. Choose Your Broker Wisely

Choosing the right broker is half the battle. Take your time to check reviews and recommendations. Make sure the broker you choose is trustworthy and suits your trading personality.

Remember, there are lots of fake brokers out there who will only stand in your way. Go for an authorised broker with a licence.

If you want a reliable and trustworthy broker, look no further than Admiral Markets!

trade forex and cfd

2. Create Your Own Strategy

No list of currency trading tips is complete if it doesn’t mention strategies. One of the most common mistakes beginner traders make is not creating an action plan.

Figure out what you want to get out of trading. Having a clear end goal in mind will help with your trading discipline.

3. Learn Step-by-Step

As with every new practical learning activity, trading requires you to start with the basics and move slowly until you understand the playing field. Start by investing small sums of money and keep in mind that slow but steady wins the race.

4. Take Control of Your Emotions

Don’t let your emotions carry you away.

It can be very difficult at times, especially after you’ve experienced a losing streak. But keeping a level head will help you stay rational so you can make competent choices.

Whenever you let your emotions get the better of you, you expose yourself to unnecessary risks.

5. Stress Less

This is one of the Forex tips that sounds really obvious – because it really is.

But guess what? Trading under stress generally leads to irrational decisions and in live trading that will cost you money.

Therefore, identify the source of your stress and try to eliminate it or at least limit its influence on you. Take a deep breath and focus on something else.

Every person has their own way of overcoming stress – some listen to classical music, while others exercise. Listen to your mental health and learn what works best for you.

6. Practice Makes Perfect

Of all the Forex tricks and tips for beginners, this is the most important. You will never succeed at anything on your first try. Only constant trading practice can yield consistently top results.

But you probably don’t want to lose money while learning the basics, right?

Luckily for you, trading on a demo account costs nothing to set-up and not a cent more to use, for as long as desired.

7. Learn one trading strategy, stick with it.

One of the biggest mistakes I see beginning traders make again and again, is changing trading methods too often. If you are using a logical, common sense trading method like my price action method, you need to really learn it and master it before you do anything else. If you jump from method to method because you think you’ll find some “Holy Grail” trading strategy, you are simply operating on false hope and being illogical, and you will lose money.

Also, don’t switch methods just because you had a few losing trades. Any method will have a certain amount of losers over a sample size of trades, this is normal and part of trading. You cannot let losing trades affect you too much; you really do need ice cold discipline to excel at trading.

8. Don’t get overwhelmed

It’s easy to feel overwhelmed with information and trading strategies as a beginning trader, it happens to all of us in the beginning. The best way to limit this or avoid it altogether, is to find a mentor, someone to learn from, and piggy back off their success. I have laid out all my trading strategies for you to learn in my price action trading course and in my opinion, the best thing you can do is block everything else out, forget everything you’ve learned, and start over with my teachings from a clean slate and focus only on that until you really know what you’re doing.

9. Don’t freak out when a trade moves against you

This one is big, because most traders, especially beginners, freak out or over-react at the first sign of a trade moving against them. This is much more of a problem in live trading than demo trading, due to the differences in emotion between them, but it is a problem and it needs to be addressed.

A trade moving against you is NORMAL. I’ve had trades move to within 5 pips of my stop loss and go on to be HUGE winners after that. If I had freaked out and closed them out before they hit my stop loss, I would have not only lost money, but I would have lost a lot of profit too. This is the main reason why you need to let your trades play out and not close them out early ONLY because they’ve moved against you.

It’s really pretty simple: Set your stop loss in a logical / safe place (more on this later), manage your position size so that your dollar risk is at a level you’re OK with losing, and LET THE TRADE GO. Don’t micro-manage your trades, just let the market do the work and you go play a round of golf, go to the gym or go to sleep…then check on the trade the next day. Doing nothing with your live trade is usually the best (and most lucrative) move, meaning set and forget it.

10. Learn the basics first

Many beginning traders try jumping right into the market with no real background knowledge on the markets they are trading. To build a solid trading foundation, you need to take the time to learn about how the Forex market works (or any market you’re trading) and really get a solid understanding of all the jargon, etc. before you actually dive in and start learning a trading strategy.

How Fed rate hike will affect your finances

Credit cards

Most credit cards have a variable rate, which means there’s a direct connection to the Fed’s benchmark rate and card holders will feel an immediate pinch.

“Variable rate debt is where you are most susceptible as interest rates rise,” McBride said.

The average American has a credit card balance of $6,375, up nearly 3 percent from last year, according to Experian’s annual study on the state of credit and debt in America. Total credit card debt has reached its highest point ever, surpassing $1 trillion in 2017, according to a separate report by the Federal Reserve.

Tacking on a 25-basis-point increase will cost credit card users roughly $1.6 billion in extra finance charges in 2018, according to a WalletHub analysis. Factoring in the five previous rate hikes, credit card users will pay about $8.4 billion more in 2018 than they would have otherwise, WalletHub said.

However, for those with good credit, there are still opportunities to find a better rate or snag a zero-interest balance transfer offer to insulate yourself for a time from further rate hikes and “give yourself a tail wind toward debt repayment,” McBride said.

Mortgages

The economy, the Fed and inflation all have some influence over long-term fixed mortgage rates, which generally are pegged to yields on U.S. Treasury notes, so there’s already been a spike since the start of the year.

The average 30-year fixed-rate is now about 4.54 percent — up from 4.15 percent on Jan. 1 and significantly higher than the record low of 3.5 percent in December 2012.

With interest rates rising, adjustable-rate mortgages will certainly be heading higher, too, and those with some types of ARM loans “are sitting ducks for getting another increase,” McBride said.

Many homeowners with adjustable-rate home equity lines of credit, which are pegged to the prime rate, also will be affected. But unlike an adjustable-rate mortgage, these loans reset immediately rather than once a year.

For example, a rate increase of 25 basis points would cause borrowers with a $50,000 home equity line of credit to see a $10 to $11 increase in their next monthly payment, according to Mike Kinane, senior vice president of consumer lending at TD Bank.

10 Tips for Successful Long-Term Investing

There are essentially two strategies for boosting savings and investments: Increase your income and cut your spending.

Whether you’re a young adult ready to start saving for retirement, a 50-something ready to pay off your mortgage or a senior citizen living on a fixed income, these tips can help you build savings, reduce debt, boost income and invest smartly.

1. Review your needs and goals

It’s well worth taking the time to think about what you really want from your investments.

Knowing yourself, your needs and goals and Your appetite for risk is a good start, so start by filling in a Money fact find.

2. Consider how long you can invest

Think about how soon you need to get your money back.

Time frames vary for different goals and will affect the type of risks you can take on. For example:

  • If you’re saving for a house deposit and hoping to buy in a couple of years, investments such as shares or funds will not be suitable because their value goes up or down. Stick to cash savings accounts like Cash ISAs.
  • If you’re saving for your pension in 25 years’ time, you can ignore short-term falls in the value of your investments and focus on the long term. Over the long term, investments other than cash savings accounts tend to give you a better chance of beating inflation and reaching your pension goal.

3. Make an investment plan

Protect yourself

Once you’re clear on your needs and goals – and have assessed how much risk you can take – draw up an investment plan.

This will help you identify the types of product that could be suitable for you.

A good rule of thumb is to start with low risk investments such as Cash ISAs.

Then, add medium-risk investments like unit trusts if you’re happy to accept higher volatility.

Only consider higher risk investments once you’ve built up low and medium-risk investments.

Even then, only do so if you are willing to accept the risk of losing the money you put into them.

4. Diversify!

It’s a basic rule of investing that to improve your chance of a better return you have to accept more risk.

But you can manage and improve the balance between risk and return by spreading your money across different investment types and sectors whose prices don’t necessarily move in the same direction – this is called diversifying.

It can help you smooth out the returns while still achieving growth, and reduce the overall risk in your portfolio.

5. Decide how hands-on to be

Investing can take up as much or as little of your time as you’d like:

  • If you want to be hands-on and enjoy making investment decisions, you might want to consider buying individual shares – but make sure you understand the risks.
  • If you don’t have the time or inclination to be hands-on – or if you only have a small amount of money to invest – then a popular choice is investment funds, such as unit trusts and Open Ended Investment Companies (OEICs). With these, your money is pooled with that of lots of other investors and used to buy a wide spread of investments.
  • If you’re unsure about the types of investment you need, or which investment funds to choose, get financial advice.
Read our independent guide on Popular investments at a glance

6. Check the charges

If you buy investments, like individual shares, direct, you will need to use a stockbroking service and pay dealing charges.

If you decide on investment funds, there are charges, for example to pay the fund manager.

And, if you get financial advice, you will pay the adviser for this.

Whether you’re looking at stockbrokers, investment funds or advisers, the charges vary from one firm to another.

Ask any firm to explain all their charges so you know what you will pay, before committing your money.

While higher charges can sometimes mean better quality, always ask yourself if what you’re being charged is reasonable and if you can get similar quality and pay less elsewhere.

7. Investments to avoid

Avoid high-risk products unless you fully understand their specific risks and are happy to take them on.

Only consider higher risk products once you’ve built up money in low and medium-risk investments.

And some investments are Usually best avoided altogether.

8. Review periodically – but don’t ‘stock-watch’

Regular reviews – say, once a year – will ensure that you keep track of how your investments are performing and adjust your savings as necessary to reach your goal.

You will get regular statements to help you do this. Find out more below.

However, don’t be tempted to act every time prices move in an unexpected direction.

Markets rise and fall all the time and, if you’re a long-term investor, you can just ride out these fluctuations.

9. Be Open-Minded

Many great companies are household names, but many good investments are not household names. Thousands of smaller companies have the potential to turn into the large blue chips of tomorrow. In fact, historically, small-caps have had greater returns than large-caps. From 1926 to 2001, small-cap stocks in the U.S. returned an average of 12.27% while the Standard & Poor’s 500 Index (S&P 500) returned 10.53%.

This is not to suggest that you should devote your entire portfolio to small-cap stocks. Rather, understand that there are many great companies beyond those in the Dow Jones Industrial Average (DJIA), and that by neglecting all these lesser-known companies, you could also be neglecting some of the biggest gains.

10. Be Concerned About Taxes, but Don’t Worry

Putting taxes above all else is a dangerous strategy, as it can often cause investors to make poor, misguided decisions. Yes, tax implications are important, but they are a secondary concern. The primary goals in investing are to grow and secure your money. You should always attempt to minimize the amount of tax you pay and maximize your after-tax return, but the situations are rare where you’ll want to put tax considerations above all else when making an investment decision

Why you should invest in index rather than stocks?

Getting an investment right is often a matter of luck, but most of the time, and resulting in an average of all investment decisions in the medium/long term, most of the time the return obtained is a matter of a well-planned investment strategy.

Investing in stocks, or their collective equivalents such as mutual funds, requires time, knowledge and dedication; at least so that we know with some guarantee what we are investing in, and whether we really have options to see a juicy return in the form of revaluations. But there is another option that, although it may give lower returns than some stocks in particular, offers a much safer return, at least 100% safe from bankruptcies or corporate extinctions. The option is to invest in indices.

Any investment decision requires a thorough analysis: if not, it is better to go to the indices
These Are The Reasons Why It May Be Preferable to Invest in Indices Rather Than Stocks 2
Statistically, for most people, it’s not usually good investment decisions to make when you use the heat of a bubble. Neither are those who simply have the money raising dust (and other people’s profits) in the bank account. And while it is true that each type of investor at each moment of his life has some needs for his savings, which must be translated into a different way of investing them, it is no less true that in the markets, the safest return is in the long term. Security is out of gold fevers that leave more and more victims than the new rich, and requires taking the time to analyze every balance sheet, every company, every market.

But not everyone has the time (or the will) to scrutinize every accounting entry of listed companies that are a potential investment destination. Something similar happens with investment funds that often also require in-depth analysis, at least to know if they are well managed and if their management style is adapted to our needs. Focusing on analyzing for that average investor, with no time or knowledge to analyze beyond a few minutes a day, we always have the indices there.

And how to invest in indices? Well, the truth is that to invest in an index as such, the best option is the quoted funds or ETFs that replicate them. This financial product, which revolutionised the investment market a few years ago, combines very low management fees, real-time trading such as shares, and dividends. Indeed, in addition to today’s topic, index ETFs are an exceptional formula for optimizing the profitability/effort+time equation.

In order for profitability to come to your statement of securities account, all that is needed is for the index to take the bullish path. On this last point in particular, which is the crux of the matter in the end, we can only recommend in general terms that you frequently read serious salmon halves like us, so that you can measure the pulse of the market at any time you need to make an investment decision.

Well, there is an empirical basis for this, but always under the previous premises of needing an investment formula that optimises this exchange of profitability/effort+time. Because obviously, a good investment in the shares that are most revalued in the market will always yield more returns. After all, indices are only a weighted average of the shares that make up the index, and mathematically there will always be stocks with a higher return than the index, but don’t forget: there will also be as many stocks with a much poorer return as the selective (and not selective) ones.

What is more, there will be stocks (and even whole companies) that will disappear from the face of the markets, resulting in a sinister balance sheet of 100% losses for the hardest-hit and most suffering investors. And that is precisely where we would like to focus on today’s issue: it is precisely by investing in indices that you are completely safe from this fateful (but not infrequent) event of corporate deaths.

And to return to the question that led to the last title: yes, there is an empirical basis for affirming that indices are the best neglected investment formula. The empirical basis requires a somewhat lengthy analysis of the life cycle of a selective index. And although we really need a senior index for the temporary sample to be somewhat rigorous, the results are going to be equally worthy of consideration.

The crises we are talking about may no longer be so fresh in popular memory, but I can assure you that both of them have been very dramatic for our socioeconomy (I hope you will at least keep the last one in mind). We are talking about that”.com” crisis that devastated the markets, and the most recent and terrible Spanish real estate crisis.

In the first of these debacles, the”.com” crisis, we must remember how there were prices related to technology that rose like a real rocket: Telefónica was the first of them, despite being a giant. But there were other protagonists in this disaster. Due to the size of our domestic selective, we can only speak of one of these”natos.com” players, unlike other markets such as the US and its large NASDAQ.

This”nato.com” star is Terra, the unsuccessful company that led the.com bubble in Spain, and which even surpassed ENDESA in terms of market capitalisation with hardly any assets and little more than a generic Internet portal. The company, once the flagship of the new economy, was de-listed in 2005 with a 98% drop from highs, and having volatilized the savings of countless small investors. However, the Ibex-35 is still there.

The other major crisis that the Ibex-35 has survived with revenues is the already”fresh” Spanish real estate crisis. Due to the generalization of the bubble within the Spanish economic reality, in addition to the always important relative weight that the construction sector has had in the economy of Spain S.A., in this case we have many more protagonists. The star of this bubble was the vibrant real estate bubble Astroc, overheated where they were, but that gave yields that seemed to be the result of a rocket that was never going to stop rising (like the price of flats). But it ended up going down (and how they did it!), just as some of us predicted.

Astroc’s travel companions were most (if not all) of the rest of the construction and real estate companies. After years of drought in the real estate market, there have been several victims. Disappearances, bankruptcies, mergers for survival have populated the sector of both listed and unlisted companies. Companies such as FCC, which was once a business example of management and profitability, have ended up impoverished and in a situation of weakness, which has taken them out of the selective market in one way or another.

We have analysed the national case of the Ibex-35 because we have to do so, but this temporary sample we spoke of earlier, in the case of our relative Ibex-35, does not meet the minimum standards of statistical rigour that some of us demand of ourselves: it is too young an index. In fact, as I was saying, the Ibex-35 as such saw the light back in 1992, which distances us from its creation for a mere 26 years.

This is really not much in relative terms when compared to longevity and business lifecycles, nor for the average return cycle for savings accumulated over a full working life. The point is that this comparison is so fair in timing that it does not allow for a more extensive comparison, so that cyclical and/or random market and economic events can be ruled out. And it is precisely today that we are dealing with the issue of investment in the long term, with a time horizon of a working life.

But the”truncated” sample of the Ibex-35 becomes revealing in other more senior selectives
These Are The Reasons Why It May Be Preferable to Invest in Indices Rather Than Stocks 7
Fortunately, we have around us other indices with more history than ours, and which are listed in an economic system very similar to the European and Spanish ones. Indeed, I’m talking to you about Comrade Dow. The DWIJ, or Dow Jones Industrial Average, is a selective that was created at the end of the 19th century, more specifically in 1896. Apart from the fact that it is undeniable where the cradle of popular capitalism lies, it is interesting to analyse those 12 companies that were included in the index at its launch, and to know what has happened to them today.

Business Insider recently did this informative analysis exercise in this article. As you may have seen, and as expected, the economic and business reality shown by the analysis of the composition of the index smells like naphthalene. And it is entirely logical, since that original Dow reflects a socioeconomy of almost 125 years ago. This is indeed a truly historic composition. But let’s move on to today’s analysis, and see if it would have been more appropriate to invest in the index, or in stocks, in this sample period.

Fixed-income funds can also fall

It is more than common for many small (and not so small) investors to see fixed income as a safe haven in which to save their savings. Sometimes you can even find certain financial advisors who sell it as such. But neither of us is right.

This erroneous concept of fixed income investment is induced by its more intrinsic nature, which basically consists of receiving the interest agreed upon in the issue year after year until the maturity of the security. But the truth is that, although it may not seem a priori, fixed income is also low. Today we analyze this paradoxical behavior that is about to reach the markets.

After the last meeting of the European Central Bank, during the subsequent press conference, Mario Draghi once again said that the ECB would maintain interest rates at the current 0% rate, while maintaining the marginal lending facility, the rate at which it rewards excess reserves held by European banks at -0.4%. In other words, the central bank will continue to charge the banks for saving their money in order to stimulate the circulation of money and loans in the Eurozone.

Needless to say, both rates, interest rates and the marginal lending facility, are currently at completely abnormal levels. And they have been there since they historically hit bottom in the first quarter of 2016. The current figures are part of the ultra-expansive monetary policy that was launched by the ECB, after other central banks such as the Fed and the Japanese central bank, in response to the Great Recession that began after the fall of Lehman Brothers in 2008.

But as we have been warning from these lines every time we have the opportunity, interest rates are not going to remain at these levels indefinitely: take this into account in your financial decisions, and especially when you’re counting on a mortgage application. In fact, the light is already visible at the end of the rate tunnel at 0%, and there is less and less time left for rates to return to their upward trend. The ECB believes that the storm in Europe is already breaking out, and that the herd can therefore now be removed from the shelter.

The truth is that, as it could not be otherwise, the financially orthodox Germany was the first European corner from which they began to demand a rate hike from the ECB quite a few quarters ago. In fact, the famous German”five wise men” have already urged the Draghi to do so.

The ECB’s response has been to state that it will not only maintain current interest rate levels, but also seek to maintain psychological stability among market participants. The aim is to help the business climate in the Eurozone, so as not to”scare” it off” prematurely: for European economic operators, a rate hike would be a significant turning point marking the end of an era.

But at the ECB, what they say is one thing, and what they think is another. In Frankfurt they are well aware of the current economic situation, and in fact behind the scenes there is already something moving in terms of interest rates. Thus, it is common knowledge that the ECB has already begun to discuss the end of monetary stimuli, including ultra-expanding interest rates. In fact, strong hands and smart investors, which often include the”professionalised” bond market, have already begun to discount this scenario, and bond prices have picked up.

Fixed’ income is also falling, so they are not surprised when they see a negative return on their fixed income funds. In fact, fixed income is falling precisely in the upward cycles of interest rates, in one of which we are about to enter Europe. The obvious question that I hope is being drawn in their minds is: And how is it likely to come down? We analyze it for you in the following lines. You’ll see how it has all the market logic.

Obviously, if you as an individual investor buy a fixed income security, whether it is a bond bond or a letter, in the fixed income securities market (or primary market), you will agree to a return in exchange for lending your money to the state (or a large national company). If you hold this security in your portfolio until maturity, you will not see any negative returns at any time, and will end up receiving the initial capital invested, in addition to the return agreed upon at the time of purchase.

WHAT ARE MIXED FUNDS?

Mixed funds are one of the broadest, most flexible and discretionary categories of investment funds available.

They could be classified as suitable for moderate profiles, but only within this category can funds be found for all tastes.

It is necessary to know what types of mixed funds exist, what characteristics they have and what average returns they are presenting. This information together with an adequate study of our risk profile as investors will open the way for us to choose a mixed fund wisely.

Let’s see how this financial product, due to its wide extension and room for manoeuvre granted to the manager, can be ideal for any type of saver.

However, it is necessary to fine-tune the shot before shooting and this is what we will learn today.

Mixed funds can be defined as those that combine both fixed and variable income portfolios in their portfolios.

We say”roughly speaking” because there are actually multiple subcategories within mixed funds, hence the problem of choosing one.

It is not as simple as simply combining the two types of assets, it is also necessary to decide in what proportion.

Objectives of the mixed funds

But let’s start at the beginning. A mixed fund was created to provide stability to an equity fund by including fixed income assets in its portfolio. In this way we create a product that is halfway between fixed income and equity funds, in terms of risk.

From another point of view, one might also think that the intention is to incorporate equities into a fixed-income portfolio in order to increase returns while maintaining an adjusted level of risk.

Which of the two visions is the right one? Is a mixed fund set up to protect a portfolio of equities or is it intended to increase the return on a portfolio of bonds?

The percentage of each of the two types of assets included in the fund’s portfolio can be used to determine the manager’s view of these issues.

In principle, it should be clear to us that a mixed fund is a category of investment funds. The categories were created jointly by the Comisión Nacional del Mercado de Valores and Inverco (Association of Collective Investment Institutions) to offer a criterion to savers and to be able to choose a tailor-made investment fund.

What the category of the fund indicates to us is the investment vocation.

In other words, the fund’s guidelines for deciding which assets to include in its portfolio and the percentages thereof.

The investment vocation defines the level of risk that the fund can assume and this information is very useful to fund managers.

Thus, a mixed fund will have more return and risk than a fixed income fund, but less than a variable income fund.

But this is all we need to know?

Of course not, of course not.

This information is very general, it does not indicate the percentage of each type of asset, and therefore, the manager’s vision, or the specific risk profile.

For this reason, different subcategories have been created within the universe of mixed funds.

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Types of mixed funds

It should be noted that mixed funds are very flexible products. In reality, all investment funds are flexible products, this is one of their advantages. However, this category is characterized by being particularly ductile.

There is no fixed percentage to determine the types or subcategories. There are ranks and the fund manager has ample room for manoeuvre in setting his or her criteria for the strategy.

We should also point out that there are other factors for defining the categories of mixed funds. Depending on the geographical area in which the selected assets originate and the exposure to a particular currency, multiple rates are set.

According to Inverco, the categories are:

Mixed fixed income euro

Characterized by not being able to have a percentage of equity exposure greater than or equal to 30% of the total portfolio. They must also have an exposure to foreign currency assets of less than or equal to 30% of the total.

International mixed fixed income

They must have an equity exposure of less than 30% of the total portfolio, but have more than 30% in assets issued by entities located outside the euro area and denominated in foreign currency.

Euro mixed equities

They must have a percentage of equity in their portfolio of between 30% and 75% (inclusive). They cannot have more than 30% exposure to assets issued in currencies other than the euro.

International equities

The distribution of the portfolio is the same as for mixed euro equities, but in this case they can have a percentage of exposure.

Investment advices

All analysts point in the same direction: a year marked by volatility and the normalisation of monetary policies. Here are some investment tips for 2018.

As for fixed income, the truth is that it should not be a priority for 2018. However, we have provided some strategies and products to balance our global portfolio with these types of assets.

As far as equities are concerned, experts still have their eye on Europe. This 2018 may come with a few surprises of volatility. For this reason, the best advice is basically active management and diversification.

Interestingly enough, these principles now apply more than ever to bonds.

Debt securities are marked by an expected rise in interest rates in the United States and the start of the normalisation of European monetary policy. This will cause bond valuations to fall.

It is recommended to be very cautious in fixed income this year. This may not be the best time and our portfolios should be focused on equity assets.

Although, without a doubt, a small exposure to this type of assets can provide an added stability in the architecture of the global investment basket.

Several analysts recommend a very active management in this scenario, as if it were equities. Those were the days when bonds could be included in the investment portfolio, time could pass and coupons could be collected, without worrying that the valuation of the assets could damage the assets.

2018 is marked by changes. Changes in monetary policy and the fear of rising inflation.

Strategy and prudence are the best advice that can be given in fixed income for 2018.

But what fixed income strategies work best in such a scenario?

Fixed income investment strategies for 2018

Long-term fixed income exposure is not recommended. These types of assets are more sensitive to inflation and will suffer more from stated intentions to change monetary policy.

There are certain managers who have a clear preference for corporate debt, leaving aside sovereign debt. The objective is clear: if we juggle credit risk, we can achieve greater profitability.

High yield” bonds are an option for those who can afford less risk aversion. Once again, however, we see diversification as the best weapon to combat credit and duration risk.

Let’s see an example of this.

Examples of fixed income products for 2018

Good management and diversification is what defines one of the best fixed income funds. Exactly the recipe so that fixed income (the little exposure we can have in favor of portfolio stability) can be of some use to us during 2018. We’re talking about Gam Star Credit Opportunities.

This fund has an annualized appreciation of 7.72% over the last three years (accumulated return over the same period of 21.93%).

How do you do it? Management, management and more management. Necessary more than ever for fixed income.

With a volatility of only 2.72%, the Gam Star Credit Opportunities, denominated in euros, is investing globally. With a maximum of 20% of the portfolio in securities issued in Emerging Markets (one of the best fixed-income strategies in the scenario described).

Government bonds, subordinated debt securities, preferred stock, convertible securities, corporate bonds and contingent capital notes make up your investment portfolio. Playing this way with credit risk; in other words, diversifying.

The fund has what fixed-income investors need for 2018, a good managerial capacity.

Management capacity and diversification is the best recipe. As the CEO of Tressis Gestión, Jacobo Blanquer, states:”Our clients do not pay us for losing money”. Perhaps this is why the mixed fund it manages, the Adriza Global FI, has little exposure to fixed income and an accumulated return of 36.86% over the last five years.

In short, fixed income is not going through its best times. A small contribution to our portfolio in search of stability is not a bad idea, as we can see from the investment policy of Adriza Global FI. Greater exposure makes it necessary to manage the portfolio with equity strategies.

Investment advice on variable 2018

In line with the above, for 2018, active management of this market is also recommended.

This year has seen a marked increase in volatility, which could jeopardise our profitability if we lose sight of the situation.